Mighty oaks from little acorns grow

A case in point would have to be American Barrick Resources, one of today’s true giants of the Canadian mining industry. Barrick’s shares now trade on the Toronto, Montreal and New York stock exchanges, as well as in Paris, Zurich, Geneva and Basel. But its beginning was more humble — a little-known privately owned company with some diversified oil and gas interests and a lot of shares outstanding seeking a TSE listing. This it accomplished through a marriage with a tiny company called Consolidated Summit Mines which did have a TSE listing, but little else.

It is not often that a broker- dealer’s penny issue makes the big league. But Summit’s initial underwriting in 1973 of 200,000 shares at 12 1/2 cents by Glandfield & Co. were exchanged into Barrick Resources on a 1-for-4 basis. These were subsequently split 2-for-1 when the name of the amalgamated company was changed to American Barrick.

The bottom line is that shareholders of Summit did very, very well. For at the time of that marriage, 4,000 shares could have been purchased for less than $2,000. That would translate today into 2,000 American Barrick worth over $50,000 plus accrued dividends.

The Summit saga itself began in 1962 with the formation of Silver Summit Mines. Formed and promoted by the late Louis Cadesky, it built a 200-ton mill at Cobalt, Ont. Opened with much fanfare by the town’s mayor and the late Hon. George Wardrope, one of Ontario’s most popular mines ministers, that venture proved disappointing and unprofitable, closing the following year after turning out only 350,000 oz. silver plus minor cobalt and copper.

That company was later revived by Louis’ brother, Frank Cadesky, who formed Summit on the basis of one new share for each four old. It then made a joint venture deal with Teck Corp. for the further development of the property. Teck, which had purchased the Summit mill, was then profitably mining good ore on its adjoining Silverfields property, almost at the Summit boundary. To finance its share of the program, Summit made a public offering of 1,000,000 treasury shares at 90 cents, which was heavily oversubscribed, winning a TSE listing which, of course, passed on to Barrick with the marriage.

At the time (May, 1983), Barrick was in no barn burner situation, with working capital of $5 million and 51,000,000 shares issued, having recently placed 3.5 million shares at $2.75. And it had just entered a costly deal with Cullaton Lake Gold Mines and Sungate Exploration that was soon to establish a partnership to develop the Renabie gold mine near Wawa, Ont.

Too, it took a position in a losing placer gold project in the Yukon. In the first 6-month period after the Summit marriage it suffered a $2-million loss.

The following year, Barrick amalgamated with Camflo Mines, a 20-year-old gold producer passed its earning peak and saddled with massive coal mining debts. And it took on United Siscoe Mines, La Luz Mines and a sizable position in Wilanour Resources, none of which proved to be any great prize.

But with these acquisitions, which included some topnotch exploration and operating personnel, the worm really turned. This came with the acquisition of the Mercur gold mine in Utah which it quickly transformed from money-loser to money-maker. And then came its fabulous Goldstrike project in Nevada, fast-shaping as the greatest gold mine in North America. And under this kind of management, who knows what more to expect down the line. A mighty oak indeed.

Summit, the acorn in this story, did have a brush with fortune prior to its Barrick marriage, for it came very close to getting on the main street of the big Hemlo gold play.

At that time, it had more than $800,000 cash in the bank looking for a worthwhile undertaking. Its secretary, mining lawyer R.A. (Roco) Schiralli who financed the original staking of the Goliath and Golden Sceptre properties on which that major gold discovery was made, spent two full days in Vancouver negotiating with their directors on a deal that would have seen this little company purchase shares in those two companies at 60 cents in the amount of $500,000.

“We were in the right place at the right time — not asleep,” said Schiralli. That deal, which would have been a real barn burner, was turned down by The Toronto Stock Exchange. The exchange, which then regarded junior mining companies akin to a necessary evil, would not permit it to invest in shares of another company.

Summit certainly missed the boat through that ruling. And what a boat, for an orebody containing over 20 million tons grading better than 0.30 oz. gold was found on the Goliath property, the shares of which soared to over $30 on the TSE. This became Canada’s largest gold mine, bitterly fought over for years by LAC Minerals and Corona Corp. in a costly legal battle that eventually turned it over to Corona in a decision that shook the mining industry.